Could We See an SRO Bill in 2013?

Oct 29, 2012

Since his rant in a Wall Street Journal[1] op-ed in early August, we haven’t heard much from Financial Services Committee Chairman Spencer Bachus (R., Ala.) on his controversial SRO (self regulatory organization) bill. But it doesn’t mean the fight for an SRO for investment advisors is over.

Of course, the future of any SRO bill depends on who becomes chairman of the Financial Services Committee next year, as well as how aggressive both sides come out swinging, said Duane Thompson, senior policy analyst for fi360.

“FINRA’s in it for the long term; they’re not going to give up that easily,” he told WealthManagement.com. “You’re going to see another rule come out.”

That said, FINRA has its work cut out for it.

“I think the expectations that it was going to have smooth sailing two years ago, when the issue first came up and Spencer Bachus was named chairman, are gone,” Thompson said. “There were a lot of alarms raised by the advisor side that this thing was a steamroller that was going to move through. Right now, FINRA would be setting up the SRO apparatus and advisors would be saying hello to their new regulator. But that obviously never happened.”

Bachus, to be sure, won’t be chairman of the committee next year, and he was the biggest proponent of an SRO. The money’s on Representative Jeb Hensarling (R., Texas), vice chairman of the committee. Hensarling hasn’t come out strongly on this issue one way or the other, Thompson said. A second option for chair could be Scott Garrett (R., N.J.), who isn’t crazy over SROs because of their cost and the lack of direct oversight by Congress.